Buying ex out of house. Property now worth less than when we bought it, despite our improvements. How do I do the sums?

[crapatmornings]

This kind of thing isn't my strong point - so help, please!

House bought for £375,000 with £340,000 mortgage. Spent £40,000 on improvements.

House now worth £340,000-£350,000 - basically, the amount of the mortgage.

Do I simply buy ex out of his half of the mortgage - which is half of the current value of the property - and that's it covered? Or is it more complicated than that and I'm missing something?

Thanks for advice.

my sis and her ex just met up and decided themselves how much she would pay him, and then got a solicitor to draw it all up formally.

i don't think there is a 'right' way, you just have to agree what you both believe is 'fair' and get it drawn up so there are no repercussions or difficulties later...

they had to take into account that she was paying the mortgage for most of the time as he was out of work etc - depends on your individual circs what you are both prepared to agree on, really...

Hmm. Thanks madwoman.

By agreement with ex (we weren't married, BTW), I was a SAHM and he worked - on the business we co-owned. We had an understanding between us that all income was both our income. We co-own the house.

My ex has had a couple of phases of being really irresponsible with our money (not just making your average human mistakes) - reckless. This has had repercussions for my financial security - so I could suggest on this basis that I shouldn't have to buy his full half in order to own the house outright. Also, does the fact that DS would live here with me (i.e. he'll be staying in his home) have any bearing on things, or not? I have a feeling that, because we weren't married, there's no protocol for how this should be handled.

If at all possible, we'd like to avoid the solicitor route.

Thanks again.

i'd just give him exactly half of the current market value as established with a mini-survey from a reputable company.

no need to make it any more complicated than that.

Thanks, fluffles. I have had one valuation back, two more to come. Will average the three.

That's what I was figuring - pay him half the current market value. And in practice this would mean, because the current value = the current mortgage, that I simply take on his half of the mortgage (so he has no more payments to make) and job done. No equity payments to be made.

I could fight for more, given the circumstances, but that could become messy and create misery which could outweigh any possible financial gains. This way seems straightforward.

will you be able to get a mortgage for the full amount?

We already have a mortgage of £340,000. Our division of the business assets should mean I am able to pay most, if not all, of it off. So I need to speak to the mortgage company, then, to see if - on this basis - they'll let me take the mortgage on myself. Thanks, lal123. As I said, this kind of thing isn't my forte - have never had to do it independently - so it's hand-holding all the way.

if you pay the mortgage off then that shouldn't be a problem. You said that you are/were a SAHM? I doubt very much in this financial climate that a mortgage company would give you a big mortgage.

They wouldn't let me take it on even if I had almost the amount that would pay it off sat in the bank?

For other reasons, I might not want to pay it off right away. But I would hope if my lender know I could pay it off, they might allow me to take it on. I really have no clue, though. This is how things should work according to my head!

I have been a SAHM, but DS has just started school and I am looking for work.

I'm sure you have thought it all through, but remember to go and get all the names on house deeds and such things changed so in years to come he (or somebody wanting money from your DH if you say he can be a bit reckless!) can't come along and say that half still belongs to him!

From what you are saying, if the mortgage amount stays the same you will end up with effectively a 100% mortgage on your property. You might find that the mortgage company will want to ensure that they end up with a 70-80% mortgage on the current value, and so if you could get it to that level, even if you don't want to pay it off in full, it might be a cheaper mortgage IYSWIM. Worth asking about different rates & fees they would charge depending on how big your mortgage is in relation to house value as I seem to remember that they are not always the same...

might also be worth thinking about how it would have been divided had you been married (ie to take into account the fact you are looking after your dc) and figure that into it too...
good luck!